Direct-response marketing has been around for over 100 years. Since the early days of mail-order catalogs. Pre-internet direct-response marketers were at the mercy of the postal system and the placement of “inquiry cards” appearing in catalogs or magazines. The cycle time for feedback on things such as ad copy, graphics or item popularity was measured in months.

Conversion tracking is arguably the single most important feature of search engine marketing, simply because of how much it reduces the time it takes to receive feedback on many important aspects of the search engine marketing selling process; keywords, search terms, ad copy, landing pages, website features and functions, etc.

Most novice AdWords advertisers view conversion tracking as a nifty feature and not as an essential tool for optimizing campaign performance. I won’t say that conversion tracking is always necessary, but there is almost always some value to be gained by implementing some basic functionality. If you aren’t willing to consider making conversion tracking a top priority, then you aren’t serious about optimizing your AdWords account! If you hire a professional to manage your AdWords account and you don’t have accurate, reliable conversion tracking in place, you have significantly hampered their ability to make significant improvements in your AdWords campaign.

My analysis of your AdWords account, whether it is before you retain me or after, will be focused in large part on conversion tracking. How I create and manage your account is highly dependent on whether conversion tracking is in place, working properly and tracks actions that are a meaningful part of the engagement process. Without reliable conversion tracking data, it’s like throwing something “over the fence” and hoping it hits the target.

The process of optimizing an AdWords campaign is about knowing what works and what doesn’t. You want to focus on and promote what works and filter or pay less for what doesn’t. Conversion tracking is a valuable tool to help you do that. At the end of an evaluation period, you may see an increase or decrease in the number of leads or sales, but if we are unable to track these actions back to a keyword and search query, it will be more difficult to know what to adjust.

If your objective for hiring me is to simply increase traffic to your website, without concern for the quality of traffic, then don’t worry about conversion tracking. On the other hand, if your objective is to increase the amount of profit, then we need to begin the engagement talking about conversion tracking. Because if we don’t select or create meaningful actions visitors can take on your website that tell us they are interested in what you offer, you have significantly reduced my ability to optimize your account and increased the amount of time it will take to make substantive improvements.

As advertisers, we can’t control what prospects search for. We can only try to influence what they see when they perform a search. It does little good to optimize your website or build an AdWords campaign for terms prospects don’t use or don’t use often enough. Therefore, our first task is to identify what users search for, how often and then match that to what you want to promote.

There will always be more traffic than you can afford to buy. Therefore, we need to determine where is that “fine line” that determines what we display ads for and what we filter out? When I review an account’s history, I try to determine what has been working and what hasn’t. If there is little or no conversion tracking data, it just makes the process more difficult and take longer.

If you believe the nature of your business and the way you engage with prospects doesn’t lend itself to AdWords conversion tracking. Or if you believe designing, developing, implementing and managing website functionality that uses conversion tracking is not worth the investment required. Then you may be at a considerable disadvantage when it comes to optimizing your AdWords campaign.

AdWords conversion tracking is free and relatively easy to set up, assuming you have an appropriate action that is a meaningful part of the selling process that a visitor will take within 30 days. Here is a short YouTube video on how to set up conversion tracking in your AdWords account.

I often find that an advertiser has all the right conditions for implementing conversion tracking, but simply hasn’t done it, for one reason or another. If they would allow me to take the time to help them implement conversion tracking before working on their campaigns, I would. The sooner you begin collecting conversion tracking data, the better.

Even with all its advantages, conversion tracking is not perfect and should be used to analyze trends and not an exact representation of every action taken on your site. More specifically, it will not work correctly if:

The visitor does not accept cookies

The visitor deletes their cookies

The visitor does not have Java enabled in their browser

The visitor takes the action more than 30 days after clicking on the ad

The Java script tracking code is not placed on the page properly

The visitor gets “cookied” using one computer and converts or takes the action on another computer.

Even with these caveats, it’s usually well worth the time, effort and expense.

Now that you have a better appreciation for the value of and limitations of conversion tracking, let’s peel the onion back a bit further.

Because conversion tracking typically uses a 30-day cookie, cost/conv data for any given keyword on any given day will change based on newly registered conversions. Here is something for you to think about. If you want to know the effect a change you make today has on cost/conv, you need to wait at least sixty days and then look back thirty days. Otherwise you will be dealing with incomplete and misleading data.

You need to resist evaluating a new keyword based on short-term data. Also keep in mind that the number of impressions and clicks can vary considerably from day-to-day. You must be willing to have the necessary confidence, commitment and patience or you should not be doing this.

Depending on your market, conversion tracking data can increase many fold over the life of the cookie, as visitors return to your site (from non-AdWords links) and convert. I make the distinction, “from non-AdWords links”, such as a bookmark, organic listing or website referrals, because AdWords attributes the conversion to the last-clicked ad, keyword and search term, even if the keyword or ad is paused.

I make the point about paused keywords because you will continue to register conversions in your account from keywords in your old campaigns, which may be paused, and you probably won’t be looking at those keywords when we launch a new ad group or campaign(s).

One more thing. In the case where the action being tracked is something which can vary in quality, such as a completed contact form, it’s important to have a feedback mechanism so that the person receiving the completed form can provide feedback to those designing the form and those responsible for evaluating the performance of the advertising campaign. Unfortunately, all too often these forms are completed by overly aggressive marketers or individuals seeking employment. I have some clients who include me in the distribution of the completed form so I can monitor the quality of the leads and provide suggestions for improving performance.

The process I use to develop a new campaign when there is account history is one I developed on my own through trial and error. In all the years I’ve been following other industry experts and pundants, no one has ever discussed anything like it. Perhaps because it’s too nuance or too difficult to know when and how to apply it. Nevertheless, I will attempt to explain.

Knowing when to apply these techniques depends on the quantity and quality of account history, specifically search terms, analytics and conversion data. Given my market niche, which is helping those who are already AdWords advertisers, almost all my clients have some account history. However, in the absence of any historical data, I usually rely on more traditional forms of research, such as keyword tools, relevant searches, competitor’s websites, etc. What many advertisers don’t realize is that a robust account history is like a custom keyword tool specifically designed for them. They just need to know how to use it.

As with any form of advertising, achieving success with AdWords comes down to optimizing your return on investment. There will always be more traffic than you can afford to buy so optimization is essential. Optimizing your AdWords account is a process of determining what works, what doesn’t and applying probability theory to whatever lies between. The process I use for determining what works and what doesn’t is based on visitor behavior and what I believe is their intent, based on the user’s search query. Did the visitor take the action you wanted? What was the relative quality of their search query?

The data element I want to focus on is a search term, because a search term is as close as we can get to knowing what the prospect is thinking. Not to be confused with keywords, which are tools for determining what search terms will trigger your ad. If we know what they are thinking, we can either filter that visitor using negative keywords or encourage them with ad copy, custom landing pages and calls to actions. See my article titled A chain of success.

Focusing on search terms and not keywords, and applying probability theory, is what separates the novice AdWords advertiser from the professional.

The fact is, you simply can’t afford to target every search term that has in the past or might convert in the future. When you consider targeting a search term, you need to consider the probability that you will be able to convert that visitor. Can you convert them 5% of the time or 1% of the time? Where you draw the line should be based on the lifetime value of that visitor. How you determine the lifetime value of a prospect will be different for every advertiser and potentially every search term. If you can convert visitors searching for blue widgets at a rate of 5% and those searching for red widgets 1% of the time, chances are you can’t afford to advertise red widgets using PPC because you can’t make the numbers work. It’s a matter of economics.

In AdWords, we use conversion tracking, in Analytics it’s bounce rate, number of pages visited and time on page that help you make these important decisions. AdWords is a very powerful and feature-rich advertising platform, but it has limitations. Prospects are not going to write an essay about what they are looking for and why; they are only going to use 3-4 “core words” in a search query. We have to be able to read between the lines and assign a probability as to whether we can convert them. This is a skill that has taken me years to develop and is a significant factor that has contributed to my success.

Knowing enough about the niche market you are targeting is critical. I go out of my way to tell prospects that I don’t pretend to know their industry, their market, their competition, their product or service. That is why I emphasize that my business model is a collaborative process. The degree to which the client knows their market and can help me understand it, will determine how successful we will be in optimizing their AdWords account. For example, if I am not aware that you don’t sell red widgets when I’m building a campaign for widgets, then you will be spending money on clicks that you can’t convert and that will be reflected in your ROI.

But it’s not as simple as knowing the search terms that work because AdWords has limitations when it comes to using keywords. If we try to be too specific with keywords, Google slaps us with the status of “Low search volume”. See my article titled The keyword conundrum. On the other hand, if we use keywords that are too broad, we subject ourselves to a lot of poor quality visitors and dangerously low keyword quality scores. See my article titled The broad-match effect.

The degree to which these challenges are present varies greatly from one campaign to the next. For some, we can achieve an acceptable level of success relatively quickly. For others it is a painstakingly slow and costly process. A lot of it has to do with the number of keywords in play and how easy it is to describe the advertiser’s product or service. The length of time it takes to develop a campaign design also depends on how much historical data exists in the account. If the market is well defined and the search vocabulary is relatively simple, having a robust account history is less importance. On the other hand, if the search vocabulary is more complex and there is relatively little account history, then the advertiser will essentially have to buy the information they need to optimize their campaign through trial and error.

One of the things I try to determine early in a client relationship is how aggressive or conservative they want to be. If they have plenty of margin in their product or want to achieve an optimized campaign sooner rather than later, we can be more aggressive. Most of the time it depends on how committed they are to using AdWords as an advertising channel. On the other hand, if there is less margin to work with and the advertiser is tentative about using AdWords, we take a more conservative approach.

There is one caveat that comes with implementing this strategy however. It has to do with the fact that there will be a point of saturation. That means there will be a finite amount of traffic that meets your criteria and the only way to get more traffic is to raise the amount you are willing to pay for a conversion. That is why it’s critical to have accurate, reliable and comprehensive conversion tracking in place. Please refer to my articles titled Conversion tracking and Telephone conversions for more information. If you are not tracking the right actions or you are only tracking a portion of the actual conversions, it will be reflected in your ability to optimize your account.

Another important element of the process is choosing the right keywords and the right keyword matching options, but that’s the topic for another discussion.

In a perfect world, the words you use to describe your product or service would be exactly how people search for it online and your website would use those same words and phrases. Unfortunately, that doesn’t usually happen. Website developers and traditional media advertisers who have experience developing advertising copy; brochures, articles, advertisements, believe they can use the same vocabulary that worked for traditional media when they build web pages for visitors from search engines. But that can be a costly mistake!

Achieving a truly optimized search engine advertising campaign goes beyond the elements of your PPC campaign, such as keywords, bid prices, ad copy, etc. It also includes how you design your website, the use of custom landing pages, the words you use on your landing pages and the rest of your website.

Many advertisers, including myself, at one time designed their website from the inside-out. In other words, how they see themselves in the market or how they see the market niche they are in. Instead of from the outside-in, meaning how visitors from search engines think and what they actually search for. The inside-out approach may work fine for prospects from other channels or existing customers. However, visitors from search engines are a unique kind of prospect. They may be somewhat naive about the topic they are interested in. They can also become overwhelmed or confused by the variety of content for what they thought was a very specific topic. They can also be quite cynical and usually have very little patience.

The way you have designed your website may make perfect sense to you, your existing customers and even industry pundants. However, if it doesn’t relate well to how prospects from search engines actually search for what you offer, what I call the search vocabulary of your market, then your campaign will be far from optimal.

There are two important reasons why you need to be aware of this. The first has to do with what prospects are thinking when they use a search engine. The second has to do with how the Google AdWords game is played. Let’s take a closer look at each of these.

If you haven’t already done so, this would be a good time to pause and read my article titled A chain of success and the subsequent linked articles.

If the way you describe your product or service and the keywords you use to build your campaign, do not match how prospects search for what you offer, you will not only limit your exposure to real prospects, but if they do manage to reach your landing page and you do not use their search vocabulary, you will have created what we call friction. It would be as if you were having a conversation with someone with a very heavy foreign accent. For example, you may advertise yourself as a psychotherapist or a psychiatrist. However, when real people with real problems search online, they are more likely to use words like therapy, counseling or help. If you don’t take this into consideration when building your campaign, you will be missing out on the biggest segment of your target market. If your landing page does not quickly and efficiently alter their thought process and bring them around to your way of thinking, you will have missed the opportunity to engage with a legitimate prospect. When a visitor from a search engine lands on your website for the first time, you have 3-5 seconds to make a connection. If you don’t, they will bounce!

When you think of using PPC advertising, whether it’s Google AdWords or Bing™Ads, you must understand that there are rules that manifest themselves in the form of a quality score. These quality scores are a way of incentivizing or punishing you for being relevant or speaking the same language as the search engine user and the search engine’s robot. If your keyword, ad copy, landing page and website do not speak the same language as your visitor, you will not only pay a hefty penalty in the form of a higher CPC, but your ad may not display for a significant number of real prospects!

If you think about the process I discuss in the A chain of success, article it is possible to pull the prospect around to your way of thinking and not break the chain, but you need to be very careful. Keywords and keyword matching options, especially negative keywords will insure that your ad only displays for the right suspects. Proper ad copy can perform a valuable translation and qualifying function. Custom landing pages, if designed properly, will keep a qualified prospect engaged long enough for you to pull them into your sales process.

When you have the benefit of historical data in your AdWords and Analytics accounts, you are on your way to learning what I call the search vocabulary of your market. On the other hand, if you are just beginning your online advertising experience and you have built your website with little or no knowledge of your market’s search vocabulary, you are at a distinct disadvantage. It means you will essentially have to buy this knowledge. By this I mean you will have to learn it over time, at some expense by buying clicks in order to capture the data. There is no keyword tool in existence that can compare with a rich search term history from your own website, AdWords or Analytics account.

Where you stand in relation to the processes I’ve discussed will determine where you are along the path to having a truly optimized PPC campaign.

My mentor, Perry Marshall, uses a graphic called The Tactical Triangle to make a very important point about PPC advertising. You can read more about it on his website by clicking here. But I’ll give you the essence of it and add some of my own examples based on working with clients.

The reason Perry uses this particular graphic is to 1) show that there are three essential elements of a successful PPC campaign implementation and 2) achieving success requires using an iterative process of testing and improving the things that are most important, hence the 80/20 rule.

The three corners of the triangle are Traffic, Conversions and Economics. Unless the advertiser has an appreciation for the entire end-to-end online selling process, they won’t be able to make significant progress in their online business because AdWords is only the Traffic piece. If the advertiser only focus on the mechanics of AdWords, there is a chance the biggest opportunity may be overlooked. You see, AdWords is about what happens, before the click, Conversion optimization is what happens after the click and none of this has any chance of working if the Economics don’t work.

Sometimes the biggest obstacles preventing an advertiser from being more successful with AdWords, has little to do with their AdWords account. There are lots of other factors that will determine the ultimate success of their AdWords campaign. The real problem may be because:

Their online business model is flawed. There isn’t enough profit in a product or service to justify PPC advertising. This is the Economics piece of the triangle.

They don’t have an appreciation for the mindset of visitors from a search engine. They are cynical, skeptical and have very little patience.

They don’t appreciate the inherent “shopping” nature of an online visitor and the associated (ROI) metrics.

They haven’t taken the time to understand their online competitive standing.

Their website, especially their landing page, is not optimized for visitors from search. The landing page and website are little more than an online brochure. It doesn’t SELL!

While you may see several competitors in a market and think you can compete and win, you may not know their unique business model. It’s possible that their entire ad spend and infrastructure could be paid for by another segment of their business. Or they may be willing to lose money in the market you are in, because they have a back-end product line with much higher profit margins.

When it comes to the performance of the advertiser’s AdWords account, here are some of the most common issues I see:

They don’t understand the psychology behind the search query or what’s going on inside the head of the user. A “User” is what Google calls anyone who uses a search engine or visits a website displaying ads.

They focus too much on keywords and not enough on search queries.

They don’t appreciate that every search query is a market unto itself.

They don’t realize that every search query has a unique value to their business.

They don’t have a viable bidding strategy. They let their ego get in the way or they have no plan whatsoever. I can’t tell you how many prospects I speak with that simply want to be in the top position”. Big mistake!

They don’t understand the importance of keyword matching options or how to use them effectively.

Having a successful PPC campaign means we have to get a lot of things right. We have to make sure we understand and address all the steps in the buying cycle and don’t leave anything to chance or the ROI will suffer. After all, online marketing is really salesmanship in print.

Most advertisers I come in contact with struggle, knowingly or unknowingly with one important principle of advertising, understanding and empathizing with prospects from search engines. Visitors from search, organic or PPC, are different from other visitors and your website must take this into account if you are going to have a successful PPC campaign.

Visitors from search are cynical, skeptical and have very little patience. From the moment they arrive on your landing page, you have three to five seconds to make a connection. If you don’t, they will leave and probably will not come back.

When we meet someone in person we can size up the situation by looking for body signals, listening to conversation, appearance, etc. But with online advertising, we have to rely on technology and copy (ad text, website text, graphics, etc.). I like to think of the process as a chain, and this chain is only as strong as its weakest link. If any link breaks, we lose the prospect and the resources we spent getting them to this point are wasted.

Here is how I describe the chain and the links within the chain:

What the prospect is thinking

What they actually type, i.e. the search query

The linkage between the search query and the advertiser’s keyword (matching options)

The actual keyword

The ad copy; headline, description and display URL

Your landing page priorities:

Capturing the visitor attention

Generating interest

Creating desire

Taking action

Conversion tracking

Your follow up mechanism

Making adjustments to improve the process or “making the chain stronger”

Ideally, everything is tied together into one continuous thought. If it isn’t, if you have left out a step or taken too big a leap in the process or failed to anticipate what they are thinking, you will lose them.

A common mistake AdWords advertisers make is not focusing on relevance. They build campaigns, ad groups, ads and use keywords that are only somewhat related to what it is they are offering in hopes of attracting a wider audience. When that happens, they usually fail at using AdWords as a viable channel for their business.

The trap that we as advertisers often fall into is knowing too much about our own business and not enough about our prospect or our competition. The choices our prospects have besides our own view of the problem they are trying to solve. We focus too much on things like features and not enough on benefits. For example, we see a keyword or query phrase and don’t realize how broad the term is.

Have you taken the time to do competitive research? Have you tried searching the major search engines using your most popular search queries? Have you studied your competitor’s landing pages, user experience, offers, calls-to-action? Have you opted-into their offer to see how they market to you? If you haven’t, then you have a ways to go before your AdWords account is optimized.

Keyword selection and keyword matching options is perhaps the single biggest issue I see when I first look at a client’s account. This is especially true when it comes to clients who offer a service. Here is a test you can do yourself. Take some of your most popular keywords and perform a Google search to see who else is bidding for those same keywords. If they aren’t selling exactly what you are, then there is a good chance your keyword is too broad.

The other problem has to do with using and understanding how powerful and yet dangerous broad-matched keywords can be when Google experiments with synonyms.

Another way of viewing the successful AdWords model is to look at it through the lense of probability. A successful AdWords campaign is really a collection of proven, high-probability models. What is the probability that someone searching using this search query, who sees this ad and goes to this landing page, will take the desired action. Our objective is to build a campaign that gives us the most number of high-probability models. This means that there will likely be some search queries that resulted in a conversion, but you simply can’t afford to focus on that query because you can’t make the numbers work. It’s simply a matter of economics.

Think of your landing page as your “elevator pitch”. Once the prospect arrives at your landing page, or enters the elevator, you better be prepared to give it your best shot because it may be your last!